Sources on literacy in Medieval Europe seem to be all over the place, reaching from the popular "Almost nobody could even sign their name" to "There was at least one person in most households who could read and write". Here's a discussion on Stackexchange that lists some sources.

The sad truth is, we may never know how literate people actually were. We can be relatively sure that especially poor people didn't have any formal education and couldn't afford expensive handwritten books. But that doesn't necessarily mean people couldn't read and write at all. A basic level of literacy was useful for a lot of people, especially craftsmen and traders. Not so much that they'd read and write whole books but enough for basic bookkeeping or passing notes to someone who lives in a neighboring village. The thing is, those are not the kind of things that would be preserved until today. Paper and parchment were too expensive for such trivialities but we have evidence from Russia that people wrote everyday correspondence on birch bark. With no need to store these writings, most people would have probably just reused whatever they were written on to light fires or just thrown them outside where they would decompose within a few weeks.

(this kind of ties into a fun fact about why so few authentic chainmail shirts have survived until today. Not because they got destroyed by rust but because after they lost their usefulness in early modern times, they were cut up and reused to scrub pots)

The noble and cleric can't read? Classes that effectively have to read in 5e and similar systems:

Bard: plays, music, stories Cleric: holy texts Monk: holy texts if they are the monastery type of monks Paladin: if trained w/clerics or in a temple. not if they are wild-sprouted paladins. Rogue: thieves' cant, smugglers for manifests, forgery. really just the average cutpurse and enforcer wouldn't need to Wizard: a nerd's nerd

Artificer: inventor's notes.

I know this is a ttrpg community rather than a video game community, but I'd like to chime in and say this is something I really liked about Kingdom Come: Deliverance.

You start off illiterate, but there's a quest to learn to read and afterwards, reading more books and such will improve your reading skills. Starting off, anything you read is literal gibberish, but then it becomes semi-coherent text with typos, and as you progress, it just gets clearer.

I could see this being something you could also incorporate in a ttrpg to add an extra challenge to your players.

Fun fact: People could commonly read in the Middle Ages.

There is wide spread belief that medieval Europeans couldn’t read and write, but most peasants could read and write in their VERNACULAR languages. The idea that only 10% of the population could read and write comes from that fact that only 10% of the population could read LATIN, which is the only reading that they thought mattered.

They weren’t wrong to think this too. Latin was one of the only standardized languages due to its use by the church. Vernacular languages varied very widely from place to place, such that it was very common that two peasants from neighboring towns or regions would not be able to understand each other, even if they could read and write some form of “German”.

Most peasant would then be able to read and write their own notes and records, but probably wouldn’t be able to sent letters to next town or read any books.

Quests:

• You have scurvy. Find a citrus. (Spoiler, there are no citrus on the whole map.)

• Watch these sheep for 12 hours. And again tomorrow. And the next day. And the next. Until you die.

• A minstrel is in town. Watch for a minute on your way to watch your sheep.

• Your wife has died of the plague. Bury her, then go watch your sheep.

• Don’t shag your sheep. (Difficulty: impossible)

• You have the plague. Lie down in bed until you die.

While its true that the average person wasn't what we would consider literate, its not true that they could literally read nothing.

It's perfectly acceptable that magic exists, but people being able to read is wildly unrealistic.

I loved when older editions had barbarians needed to be illiterate unless they took a feat. No books just RAGE!!!

Additionally, remember that there probably isn't any standardized spelling, so if you give your players notes you can misspell however you like.

This could even be a clue that a letter has been forged, if the previous letters were spelled one way and the forged one is spelled differently!

That's why we keep the low level wizard around

Then deliver quests via talking owl, like in Zelda

Shadow of the Demon Lord does this. Each language can have speak, read, write. Players have to invest to do these things. it's kind of neat, but I can see it also being pointless book keeping to some.